There were some cautious hints, subtle ones of course, provided by the Bank of England in today's interest rate statement. Let's dive right into it.
First, they submitted this clip to the forward directive:
“As part of the August forecast round, committee members will consider all available information and how this impacts the assessment that the risks from persistent inflation are subsiding.”
Second, there are some policymakers who are already looking to ignore stubborn services inflation. The minutes revealed the following:
“The positive news in services inflation compared to the May report did not significantly change the contractionary path the economy was on. This view was supported by evidence suggesting that the recent strength in services inflation included the regulated and indexed components of the basket, and volatile fluctuations. Such factors would not It pushes inflation higher in the medium term.
Perhaps most importantly, the Bank of England says today's decision was “finely balanced” for some policymakers in light of the above. This applies to three members, who voted to hold interest rates instead, the BBC reported. If you put them on the same side as Dhingra and Ramsden, we might expect a 2-0-5 vote in favor of rate cuts in the near future.
Regarding Bank of England pricing, not much has changed though. The odds of a rate cut in August were around 34% at the meeting and are now around 43%. As for total interest rate cuts this year, traders are now seeing rate cuts of approximately 49 basis points versus approximately 45 basis points before.
Well, mark your calendars. The upcoming UK CPI report on July 17 will be important in determining whether August goes into effect or not.
